Don't Bail Out the Farmers
We are all seeing how tariffs damage economies by raising prices, distorting markets, and encouraging foreign retaliation against our export industries. What we see less of is the swamp-infested cronyism that tariffs encourage: When tariffs are enacted, as with the 2018 steel and aluminum tariffs, lobbyists rush to seek exemptions for individual businesses. By my colleagueJudge Glock's count, those 2018 tariffs prompted 425,000 requests for exemptions, 200,000 of which have been approved based largely on political donations and connections. These individual business carve-outs, however, pale in comparison to the budget-busting tariff bailouts likely headed back to the farmers of deep-red America. During President Donald Trump's first term, farmers received$24 billionon top of their regular farm subsidies to compensate for the loss ofaccess toforeign markets resulting from Trump's trade war, such as China's 25 percent retaliatory tariff on American soybeans. Then, in 2024, even as candidate Trump promised a more aggressive trade war that could cripple the farm economy, rural voters nonetheless preferred Trump toKamala Harrisby a 30-point margin. Trump earned a staggering78 percentof the vote in the 444 counties most heavily dependent on farming. In short, farm country voted overwhelmingly to unleash a new trade war. And now these same farmers and their political leaders want taxpayers to finance another round of bailouts to protect them from the consequences of their own votes. Congress already approved $10 billion in "emergency" payments to farmers during President Joe Biden's final days, and now Trump has reportedlytoldAgriculture Secretary Brooke Rollins to "have some programs in place that would potentially mitigate any economic catastrophes that could happen." Congress and the farm organizations arealready discussinghow to structure such a taxpayer bailout. Another farm bailout should infuriate taxpayers. Consumers and businesses who paid$16 billionin tariff costs last month are not receiving any federal taxpayer bailouts. Other American export industries that will suffer from a prolonged trade war—such as software, electronics, pharmaceuticals, and energy—are not receiving any broad-based federal bailouts (just those lobbyist-negotiated individual carve-outs). Yet farmers—who actively endured an earlier Trump trade war and then provided overwhelming vote margins to return Trump to the White House to unleash an even more destructive trade war—are now set to receive special taxpayer protection from the consequences of their own votes. What happened to the Republican belief in individual accountability? Republicans love to lecture low-income voters that poverty is a moral failing, and they argue that shielding poor families from the consequences of their poverty-inducing decisions will undermine the necessary incentives to change their behavior. Apparently, such tough-love approaches do not apply to Republican voters, who are always quick to explain why their own taxpayer bailouts and welfare payments are different. True economic conservatives (all eight of us remaining) will not be surprised to learn that such bailouts make little economic sense as well. Most of the 2018-2019 assistance payments were paid from theMarket Facilitation Program(MFP). In calculating the bailout formulas, the USDAvastly overestimatedthe forthcoming farmer losses to tariffs, leading it to significantly overcompensate affected farmers. U.S. food exports in 2018 and 2019fell only slightly, and soybean revenues—expected to bear the brunt of those retaliatory tariffs—temporarilydipped by 11 percentbefore surging 60 percent above pre-tariff levels by 2022 after the trade war had died down. Moreover, those earlier farm bailouts were egregiously tilted toward thewealthiest agribusinesses. Astudyby the American Enterprise Institute notes that "the largest 10 percent of farms, with average annual gross farm incomes of $2.14 million, received average subsidies … of $230,700 per farm" in 2018 and 2019 from the MFP and crop insurance program. By contrast, owners of midsize farms received an average of $18,000, and smaller farms received virtually nothing. These bailout payments not only exceeded farmer losses from the trade war, they were also duplicative. Washington already distributes$20 billionin annual farm subsidies that are paid out even during boom years. And when the farm economy dips, the aforementioned federal crop insurance program already compensates farmers at taxpayer expense. Receiving regular farm subsidies, crop insurance payments, and tariff bailout payments means essentially triple-dipping on government farm welfare. Farm subsidies remain broadly popular because Americans mistakenly believe such policies exist to protect poor, struggling family farmers from crop and weather unpredictability. In reality, farm subsidies are America's largest corporate welfare program. The agriculture industry has undergone intense consolidation into mammoth agribusinesses, which are reaping the benefits of billions of dollars in farm aid. Owners of the largest 10 percent of farms—which receive the vast majority of farm subsidies and bailouts—are projected toreportan average net cash income of $572,000 this year. Again, that figure is not their gross sales, but rather net cash income after expenses. Even with tariffs and a deep pandemic recession, net farm income since 2016 has shown anaverage profit marginof 24 percent and not dropped below 15 percent in any of those years. These healthy profits have blessed agriculture with one of the lowest bankruptcy rates of any industry. Yes, weather, crop, and now tariff unpredictability bring yearly fluctuations in farm income. Yet the answer to volatility is insurance, not a permanent welfare system that pays out in both good years and bad. Crop insurance and futures contracts can smooth out the yearly volatility in a manner that leaves these wealthier agribusinesses closer to their quite high average incomes without burdening taxpayers. Of course, focusing on agricultural economics misses the point. Farm subsidies and bailouts are about raw political power. A century of government central planning in agriculture has unwittingly consolidated most farm production away from family farms and toward corporate agribusinesses. It has also organized farm producers into a politically aggressive network of broad- and commodity-based lobbying organizations that have built real power in Washington. Lawmakers who would never admit that health insurance lobbyists influenced their health care bill, or that the coal industry wrote their energy bill, will openly brag that the farm lobby writes their farm bills. Republicans are disproportionately elected by rural America, and are just as aggressive as urban Democrats in shoveling welfare benefits and subsidies back home to their supporters—the GOP's free-market rhetoric ending at the farm's edge. Long-time central planning in agriculture and Trump's central planning in trade have set the stage for another expensive round of taxpayer bailouts, welfare payments, runaway spending, and swampy government favoritism. Tariff revenues are diverted to new spending rather than contributing to deficit reduction, all to protect rural Americans from the costs and consequences of a policy they voted to unleash on the rest of the country. If President Trump and congressional Republicans believe tariffs are good for America, then they should embrace their consequences. Don't bail out the farmers again. Read more at The Dispatch The Dispatch is a new digital media company providing engaged citizens with fact-based reporting and commentary, informed by conservative principles. Sign up for free.
Don't Bail Out the Farmers We are all seeing how tariffs damage economies by raising prices, distorting markets, and encouraging foreign...
